Apple announced its largest share buyback programme, worth $110 billion, on Thursday after reporting an annual drop in its March quarter net profit and revenues.
Apple’s chief financial officer Luca Maestri said the board has authorised the share repurchases “given our confidence in Apple’s future and the value we see in our stock”.
The Cupertino-based company reported a 2.2 per cent annual drop in the 2024 fiscal second-quarter net profit to more than $23.6 billion. Its earnings per share stood at $1.53.
Revenue during the January-March period dropped more than 4 per cent to $90.8 billion, slightly exceeding analysts’ estimates of $90 billion.
But chief executive Tim Cook said he expects a sales growth in the current quarter as the company increases its investment on artificial intelligence-driven features that will be announced in coming months.
“More than ever in the past decade, the company needs new products and solutions that will shift its behemoth operating costs back into the sustained growth path,” Thomas Monteiro, senior analyst at Investing.com, told The National.
"Against this backdrop, Apple will need massive mid-term investor support and trust, which is why it announced its largest-ever round of buybacks.”
After the earnings announcement, Apple stock surged 11.6 per cent to trade at $184.64 a share in after-hours trading on Thursday.
It closed 2.20 per cent up at $173.03, giving the company a market value of $2.67 trillion.
Its stock has dropped almost 7 per cent since the start of the year.
Falling iPhone sales
iPhone sales accounted for more than half of the company's total revenue in the last quarter.
They dropped 10.4 per cent to nearly $45.9 billion in the quarter from the year before period, missing analysts’ estimates of $46 billion.
Analysts said the decline in sales indicates a lacklustre demand for the latest generation of iPhone 15 series, which was launched in September.
In its defence, Mr Cook said last quarter’s iPhone sales faced tough comparison with the previous year period, during which the company recorded $5 billion in deferred iPhone 14 sales stemming from supply issues caused by the Covid-19 pandemic.
The company’s total revenue from its services division grew about 14 per cent annually to almost $23.9 billion, while revenue from wearables, home and accessories products dropped 9.6 per cent annually to more than $7.9 billion.
It was an all-time revenue record in the company’s services division.
Revenue from iPads and computers dropped almost 6 per cent to more than $13 billion.
“Thanks to very high levels of customer satisfaction and loyalty, our active installed base of devices has reached a new all-time high across all products and all geographic segments,” said Mr Maestri, without disclosing the exact number.
Why Tim Cook is optimistic about China
Apple’s sales in the Americas region accounted for more than 41 per cent of the company's total second-quarter revenue, with more than $37.2 billion.
It was followed by Europe and the Greater China market (China, Hong Kong and Taiwan), which added $24.1 billion and $16.3 billion, respectively, to the company’s revenue.
In Europe, sales remained flat while they dropped 8 per cent in the Greater China market.
Apple is facing stiff competition in China from local brands such as Huawei, Xiaomi and Oppo. But Mr Cook is optimistic about the Chinese market’s future potential.
“I feel good about China. I think more about long term than to the next week or so,” Mr Cook told CNBC.
Japan and the rest of the Asia Pacific market added more than $12.9 billion to Apple’s second-quarter sales, an annual drop of 15 per cent.
Apple said its board of directors had declared a cash dividend, payable on May 16, of $0.25 for each share of the company’s common stock.
Its cash and cash equivalents surged 9.1 per cent annually to more than $32.6 billion as of March 30.
Why Apple needs more futuristic products like Vision Pro
In February, Apple also entered the augmented reality headset market with the launch of the Vision Pro.
With a hefty price of almost $3,500, the product has had a slow start and may take few years before it significantly contributes to Apple's revenue, analysts said.
"However, the sustained downtrend in iPhone sales and pressured margins show that the revenue growth plateau is more than a regional problem and should keep on deepening without new, more innovative products," Mr Monteiro said.
Apple is expected to announce a range of new products at an event next week, and at its Worldwide Developers Conference in June.
Kat Wightman's tips on how to create zones in large spaces
- Area carpets or rugs are the easiest way to segregate spaces while also unifying them.
- Lighting can help define areas. Try pendant lighting over dining tables, and side and floor lamps in living areas.
- Keep the colour palette the same in a room, but combine different tones and textures in different zone. A common accent colour dotted throughout the space brings it together.
- Don’t be afraid to use furniture to break up the space. For example, if you have a sofa placed in the middle of the room, a console unit behind it will give good punctuation.
- Use a considered collection of prints and artworks that work together to form a cohesive journey.
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
if you go
The flights
Fly direct to Kutaisi with Flydubai from Dh925 return, including taxes. The flight takes 3.5 hours. From there, Svaneti is a four-hour drive. The driving time from Tbilisi is eight hours.
The trip
The cost of the Svaneti trip is US$2,000 (Dh7,345) for 10 days, including food, guiding, accommodation and transfers from and to Tbilisi or Kutaisi. This summer the TCT is also offering a 5-day hike in Armenia for $1,200 (Dh4,407) per person. For further information, visit www.transcaucasiantrail.org/en/hike/
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KILLING OF QASSEM SULEIMANI
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
